A Neighborly Approach
Positioning itself as the quintessential neighborhood bar, Bar Louie is already in 25 states and is poised for growth, with plans to add 200 new units by 2018. In 2013, Bar Louie opened 21 locations, bringing its number to 80. This year, there are plans to open 25 more. And, according to the chain’s CEO John Neitzel, that’s only the beginning.
“We’re not a club, we’re not a shot-and-beer dive, and—although we have a scratch kitchen and are known for our food—we’re not a traditional casual restaurant,” he says. “When we ask our guests to compare us to the competition, they tend to put us with neighborhood bars and restaurants rather than casual-dining chains such as Applebee’s or TGI Friday’s. We’re the place they come to socialize, and that breeds loyalty. In fact, in a guest survey we conducted, 81 percent said they come to Bar Louie more than one time each month.”
Neitzel, former president of TGI Friday’s, says that the urban ambiance of Bar Louie appeals to a younger, more upscale demographic—the majority of guests, 74 percent, are between the ages of 25 and 44, are highly educated, and have incomes of at least $75,000. And they like to unwind with spirited beverages and good food.
Unlike most casual-dining chains where spirits sales account for about 15 percent of the total revenues, Neitzel notes that at Bar Louie, spirits account for 50 percent of sales. The spirits menu features more than a dozen martinis, 17 signature cocktails, at least 12 microbrews and imported beers, and more than 20 wines available by the glass.
Although signature-cocktail recipes are sacred, general managers are free to add spirit brands and presentations to appeal to local preferences. For example, the system-wide Bar Louie menu does not include a Brandy Old-fashioned, but the drink is offered in Wisconsin, where brandy is popular.
Another point of differentiation from other chains is that no two Bar Louie locations look alike. About 80 percent of the units are adaptations of existing spaces, which Neitzel estimates saves an average of 40 percent over new builds. By showcasing existing architectural and decorative features, the company gives each restaurant a unique, localized personality. Site conversion also allows for a 100-day turnaround from lease signing to opening.
The initial investment to open a Bar Louie can range from $410,000 to $3 million, and the average unit volume for a Bar Louie restaurant is $2.5 million.
More than 70 percent of the units are corporate-owned, up from 50 percent in 2011. The 200 units expected to open by 2018 will be evenly split between company and franchise ownership.
Over the coming 24 months, Bar Louie has set its sights on adding corporate units in the Mid-Atlantic, Northeast, and Texas, which will be funded by company earnings and cash flow. Growth in franchise expansion is focused on the West Coast and parts of the Southeast.
For its franchisees, the company looks for experienced multi-unit foodservice and retail operators with a minimum net worth of $3 million and liquid assets of at least $1 million. They should be able to support at least five Bar Louie units, Neitzel says.
Franchisees pay a $50,000 fee per agreement, a royalty of 6 percent gross sales, and marketing fees of 1–3 percent of gross sales. The return on investment for a Bar Louie averages 2.5 years, according to Neitzel, but 20 percent achieve their ROI in less than a year.
The Bar Louie concept was founded in Chicago in 1991.